Rolls-Royce: 'Partnership with India - Past, Present and Future

By SP's AirBuz team

Rolls-Royce is a power systems company catering to aircraft, ships and land applications. Rolls-Royce is
best known for aero engines that power many of the world's most advanced passenger jets, like the new
Airbus A350 and the Boeing 787 Dreamliner. But, there is much more to the company than that. It also
produce lowemission power systems for ships, a wide array of land vehicles: ranging from trains to
combine harvesters. Here Kishore Jayaraman, President, Rolls-Royce India and South Asia, talks about
the company's strides in India.

SP's AirBuz (SP's): Rolls-Royce prides
itself as an innovations company and that
it connects innovations to its customers.
Could you give us examples of such innovations
and how it has made other companies
to follow suit?

Kishore Jayaraman (Jayaraman): Rolls-
Royce continues to invest in core technologies,
products, people and capabilities with the aim
of broadening and strengthening its product
and service portfolio, improving efficiency and
enhancing the environmental performance
of its products. Over the past 10 years, Rolls-
Royce has invested £7.9 billion in research
and development. In 2013 alone, Rolls-Royce
invested £1.1 billion in R&D. We continually
innovate to remain competitive and most importantly,
we ensure that innovation is relevant
to our customers' needs.

Research and development, and innovation
are crucial. They will become more so
as we strive to improve the quality and performance
of our power systems and services.
The Trent XWB, for example, has proved to be
the most efficient large civil aero engine in the
world. Design and development of that engine
started in 2006. In our marine business, innovation
and the development of liquefied
natural gas (LNG) power systems has led to
the possibility of a 40 per cent reduction in a
ship's CO2 emissions and the virtual elimination
of sulphur and oxides of nitrogen emissions compared with conventional,
diesel-powered craft. This presents a clear environmental and commercial opportunity.
These innovations have also taken years to develop.

SP's: Rolls-Royce has had a flat year in 2014 financially and expects a return
to growth this year. How does it look at the beginning of the year?
What would be the drivers for this return of growth for Rolls-Royce?

Jayaraman: At a global level, significant challenges and changes shaped the
year 2014 at Rolls-Royce. However, we made considerable progress and continued
to adapt in order to remain competitive. In the first half of 2014, the Group
order book was £70.4 billion. We received a net order intake of £6.5 billion
and delivered £644 million in underlying profit before tax. This is a long-term
business and we remain confident in its growth trajectory. We continue to make
investments to deliver the £70 billion order book and to deliver cost reduction.
Our continuous investment in technology and our commitment to excellence
allows us to seize opportunities that will change the present and help us face
the future with confidence.

We see a huge potential in India and we will definitely leverage our strategic
partnerships for pursuing future growth. As India gets ready to move on
its growth path, we will continue to support the country with our powerful
portfolio of products and services and the right combination of experience and
advanced technologies.

SP's: What is the order book for aerospace engines like and how much does
civil aircraft engines constitute of that?

Jayaraman: The civil aerospace segment is a major manufacturer of aero engines
for the airliner and corporate jet markets. We haveparticular strengths
in the wide-body market where Rolls-Royce has a 54 per cent share of aircraft
on order. Demand for our products and services remains robust. A net order
intake of £2.6 billion compares with £10.9 billion in H1 2013. The order book
reduced by two per cent, due to deliveries
made during H1 and cancellations, primarily
by Emirates of A350s.The order book contains
2,554 Trent engines that will drive the growth
in aftermarket revenue over the next decade.

Significant orders in the first half included:

A $1.1 billion contract with All Nippon Airways
to power 25 Boeing 787 Dreamliner
with our Trent 1000-TEN.

A TotalCare contract with Cathay Pacific for
Trent 700 engines that power Cathay's fleet
of 60 A330s in service and on order; and

A $400 million TotalCare contract with
new customer Azul Brazilian Airlines for
its planned fleet of six A330s and five A350
XWBs.

SP's: Could you tell about India and the emerging
markets in terms of civil aircraft engines?
What is the potential and what is Rolls-Royce
strategy in garnering market share?

Jayaraman: The Indian civil aviation industry
is amongst the top 10 in the world with a size
of around $16 billion. With a promising civil
aviation market, I believe that the way forward
for India is wide-body aircrafts since it
could be a key solution to increase efficiency
in passenger load and air traffic.

Also, with increased number of Indian
carriers flying overseas and with the 49 per
cent FDI in aviation coming into play, we expect
a huge interest in the Trent XWB and Trent 1000, which powers the A350
and B787 respectively. As mentioned above, these wide-bodied aircrafts have
the potential to increase efficiency in passenger load and air traffic in India.

Our Trent XWB is the world's most efficient aero engine, which entered into
service with Qatar Airways last year. The Trent XWB is specifically designed for
the aircraft and improves the aircraft efficiency by almost 25 per cent making
it 16 per cent more efficient than the first-generation Trent engines. The fifthgeneration
of the Trent engine family, the Trent 1000 engine was selected as
launch engine when the Boeing 787-8 aircraft entered service in 2011 and has
been selected as launch engine when the 787-9 aircraft enters service in 2014.
The Trent 1000 powered Boeing 787 Dreamliner is 20 per cent more efficient
than the Boeing 767 aircraft it replaces.

With such a powerful portfolio of products, we believe that Rolls-Royce can
offer India the right combination of experience and new technologies, to contribute
towards building capabilities in the wide-bodied aircraft market for India.

There is renewed focus on creating better infrastructure across India. We
are sure the plans will include road networks, railways, but also aviation. We
think we will also see a growing business friendly environment and combined
with the focus on better infrastructure, it will ultimately support a more robust
civil aviation industry. This in turn will drive India's domestic as well as international
travel. This means that passenger traffic in and out of India will grow
at an even faster rate, which is forecasted to triple in the near future.

SP's: In India, you have a joint venture with HAL. Could you give an update
on what the JV is doing, the kind of export orders it has bagged, and what
is its mandate?

Jayaraman: RollsRoyce's association with HAL is one of the longest partnerships
in defence aerospace history, and is now its 60th year. We started with
licensed production of Orpheus engines that powered the Kiran aircraft, progressing
to co-production on the Adour family of engines.

The Hawk Advanced Jet Trainer's Adour Mk871 engine marks the latest of
a long line of Rolls-Royce engines that have been produced under licence by
HAL in Bengaluru, with the first locally assembled aircraft and engine handed
over to the IAF in August 2008. The IAMPL facility in Bengaluru is testimony to
our long-standing association with HAL.

SP's: Rolls-Royce has been embroiled in several investigations in India and
elsewhere. Has this slowed down business globally and also in India?

Jayaraman: We await clarification from the authorities in India. We have made
clear that we will cooperate with the regulators and have been explicit that we
will not tolerate misconduct of any sort.

SP's: Could you tell us what you will be showcasing at Aero India 2015 and
why?

Jayaraman: This year at Aero India 2015, we will highlight our 'Partnership
with India Past, Present and Future' by showcasing our technologically advanced
and innovative products. At the booth we will feature our three innovative
engines the Adour, which powers the Hawk trainer; the Trent 700 from
the Airbus A330 tanker aircraft; and the C-130J's AE2100 engine.

Rolls-Royce has been present in India for the past eight decades and contributes
to the development and modernisation of Indian armed forces. We believe
that Aero India is a perfect platform for us to showcase our capabilities
and also network with our customers, partners, etc. We look forward to bolstering
our business opportunities in international aviation and defence sector this
year at the show.

SP's: India has vast pool of engineering talent. How is Rolls-Royce strategised
to utilise the talent pool? Are you tying up with academic institutions,
R&D centres, etc.?

Jayaraman: There is high demand and competition for good talent across all
industry sectors that are dependent on innovation and creative thinking. And
the aerospace industry is no different. While India is home to a million engineering
graduates every year, it is the industry readiness of this vast talent
pool that will play a key role in achieving the vision of creating a scalable and
sustainable aerospace ecosystem in India.

Rolls-Royce currently employs 1,000 engineers in the country through
outsourced agreements with QuEST and TCS in Bengaluru. We further intend
to leverage the capability built up in the last decade in the two supplier engineering
centres in India for our programmes. Our strategic suppliers have
visibility on the level of skills and complexity of work they intend to execute
in the future and they have robust in-house capability development plans
governed by Rolls-Royce.